European Union Emissions Trading Scheme (EU-ETS)

EU-ETS: What to Watch for in 2011

January 10, 2011

The business aviation industry has watched the development of the European Union’s Emissions Trading Scheme (EU-ETS) closely over the last several years, with concerns regarding when – and if – the scheme will take effect and how it could effect international operations.

“There are no provisions of the EU-ETS taking effect in 2011,” said NBAA’s Steve Brown, senior vice president of operations and administration. “But absent U.S. legislation or a United Nations agreement on carbon emissions, the EU will have to decide in 2012 whether to begin implementing the ETS as it is currently formulated. This year, there will be several key developments to watch that could determine what shape, if any, the EU-ETS takes in 2012.”

The most important development to watch will be the United Nations’ (UN’s) effort to set global targets for reducing carbon emissions through the negotiations that recently included meetings in Copenhagen in 2009 and Cancun in 2010. A global agreement on carbon emissions would be preferable to regional schemes like the EU-ETS, but in Copenhagen and Cancun the international community failed to agree on binding targets. The next UN climate meeting is scheduled for December 2011 in South Africa and its provisions, if definitive, could preclude the need for implementing the EU-ETS.

Informing any global agreement on carbon emissions for the aviation industry will be the International Civil Aviation Organization (ICAO), a UN body.

“NBAA strongly supports a global approach to emissions reduction,” said Brown. “A unilateral, European-only approach is unwise and unnecessary, because airplanes operate globally, not just regionally. Whatever emissions targets are developed need to be developed through ICAO and the UN.”

Another key development that could affect the implementation of the EU-ETS is a lawsuit brought by the Air Transport Association, the association of U.S. airlines. The airlines, which also favor a global framework for carbon emissions, are challenging the legality of the EU’s decision to unilaterally extend the ETS to international flights to, from or within EU countries. The lawsuit is being considered by the European Court of Justice (ECJ), which has the authority to rule on the validity of the EU law.

“NBAA is actively monitoring the legal challenge in the ECJ and will provide regular updates to Members in 2011,” said Brown. “We’re also participating in ICAO panels in support of a global emissions framework and we’re involved in domestic U.S. policymaking on emissions in Congress and at the Environmental Protection Agency. Members should stay tuned for more information on all these policymaking fronts.”

Currently, there are no ETS provisions in effect across the EU that require compliance from operators. However, Brown advised that some EU member countries are requesting that operators submit information on where they fly and what type of aircraft they operate.